Munich (April 17, 2014)—A long-running battle in the global photovoltaic (PV) market between the United States and China over antidumping and subsidy charges could expand into higher solar costs, with wide-ranging ramifications for the U.S. if punitive tariffs are levied on Taiwanese cells.

However, enough tariff-free capacity should still be available in 2014 to ensure there are no shortages in the United States this year, even if solar modules are expected to feel an impact on pricing, according to new analysis from IHS Technology (NYSE: IHS).

In ongoing investigations expected to culminate later in the year, the U.S. International Trade Commission is determining if further penalties should be imposed on solar modules containing cells manufactured in Taiwan. Having already punished China in 2012 with antidumping and countervailing duties, the U.S. now is seeking to close a loophole in which Chinese module manufacturers circumvented the large fines—ranging from 34 to 250 percent—by using third-party suppliers of PV cells located in Taiwan.

If the final ruling, expected in October, determines there is cause to impose penalties also on Taiwanese-sourced PV components, the price of solar cells and panels would almost certainly rise in the United States. This, in turn, is prompting fears that an increase in pricing might cause PV panel shortages in the U.S. market and disrupt the growth of PV installations.

But the prospect of a shortage here at home is unlikely, at least for this year, IHS has deemed after a careful study of possible aggravating factors as well as feasible sources for market relief.

In all, an estimated 57.8 gigawatts (GW) of production capacity representing crystalline solar cells and thin-film solar modules is available globally in 2014, 11.2 GW of which are located outside of China and Taiwan. Those 11.2 GW of capacity are not covered under the present U.S. inquiries, and when added to 6.1 GW of global thin-film capacities, the overall available supply of tariff-free solar capacities would amount to 17.3 GW.

At such levels, enough volume remains to support the entire breadth of U.S. solar installations for 2014, projected to reach 6.5 GW, as shown in the figure. This means the U.S. need not fear the possibility of a shortage this year, IHS believes.

These findings can be found in the report, "PV Perspectives Market Brief – Issue 3 – 2014," from the Power & Energy service of IHS.

Module prices still expected to rise

"While 2014 U.S. solar installations shouldn't be severely impacted even if broader penalties were to be assessed against Taiwanese—and effectively, also Chinese—PV suppliers, antidumping duties imposed on such a significant portion of supply will have a noticeable effect on the U.S. solar market," said Wade Shafer, senior analyst for solar demand at IHS.

The lowest module prices currently available in the U.S. market—all of them Chinese modules containing Taiwanese cells—are in the range of $0.62 to $0.65 per watt. Non-Chinese suppliers, in comparison, offer products at prices higher than $0.70. Depending on the final outcome of the trade case, PV module prices could rise to somewhere between $0.75 and $0.80.

For the Chinese, preserving the U.S. market—the third largest in the world after China and Japan—will be integral.

"To maintain their market share in this region, the Chinese may have to pass on a portion of their margin to customers and also offer better financing conditions in order to remain competitive, despite punitive tariffs," said Stefan de Haan, associate director for the solar supply chain at IHS.

Chinese companies are now increasing their shipment volumes to the U.S. to build up module stocks not yet affected by tariffs, prior to the final decision in October. Such a move will allow them a buffer of a few months, noted de Haan.

"In the midterm, however, price increases appear unavoidable if antidumping duties are, in fact, implemented," de Haan added. "And in view of the importance of the U.S. market, Chinese companies are expected to ramp up manufacturing facilities in the North American Free Trade Agreement (NAFTA) zone, particularly in Mexico."

Top 10 solar module suppliers identified

Six of the top 10 solar module suppliers for the U.S. market in 2013 have their headquarters or the bulk of their manufacturing operations in China. These companies, all currently relying on solar cells from Taiwan to serve the U.S. market and sidestep the stiff fines, held a combined market share last year of 42 percent, based on total merchant shipments.

The No. 1 spot, however, belonged to U.S. thin-film manufacturer Arizona's First Solar—ahead of runner-up Yingli Green Energy, third-ranked Trina Solar and No.4 Canadian Solar. SunPower, the other leading U.S. manufacturer, was ranked fifth.

Rounding out the rest of the top 10 were SunEdison, ReneSola, Suntech, SolarWorld, and ET Solar.

The dispute first brought by the United States against China originated with a complaint filed back in 2012 by SolarWorld, which has significant interests and operations in the U.S.

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